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Capacity to contract ppt @ bec doms


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Capacity to contract ppt @ bec doms

Capacity to contract ppt @ bec doms

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    • An agreement becomes a contract if it is entered into between the parties who are competent to contract (Sec. 10).
    • Everyone is competent (i) who is of the age of majority; (ii) who is of sound mind; and (iii) who is not disqualified from contracting by any law.
  • 2. Contracts by a Minor
    • A ‘minor’ is a person who has not completed the age of 21 years. Under the Indian law a minor in not competent to contract.
    • A minor’s contract is absolutely void ab initio : In other words, a minor is neither liable to perform what he has promised under an agreement, nor liable to repay money received under it.
    • Principle behind this ruling is that a minor is incapable of judging what is good for him.
  • 3.
    • Specific performance of a minor’s contract is absolutely void: Guardian has no power to bind a minor by a contract for buying of immovable property.
    • Ratification of a minor’s contract: It means consenting to a past contract, made by a minor, of a future date on attaining majority. No question of ratification.
    • False representation by a minor – Estoppel: Estoppel means rule of evidence. A minor cannot be charged even if he represents falsely to enter into a contract.
  • 4.
    • Agreement by Guardian on behalf of minor is valid: In this case it is valid provided it benefits the Guardian or for legal necessity.
    • Insolvency: Minor cannot be insolvent.
    • Relinquishment: Not applicable to a minor.
    • Service Contracts: Contract for personal service is void.
    • So, when can a minor contract? (Exceptions)
    • As a Promisee. For example, promissory in minor’s favor can be enforced by him.
  • 5.
    • As an Agent. Can bind his principal by his acts, but is not liable to the same.
    • As a partner in a partnership firm. Not liable to any obligations of the firm.
    • Necessaries: Minor is bound to support the supplier of necessaries. Supplier can be reimbursed from property of minor.
  • 6. Contracts by Persons of Unsound Mind
    • Contracts by Lunatics.
    • Example: A patient in a lunatic asylum who is at intervals of sound mind, may contract during those times.
    • Contracts by Drunkards. Contract by such a person is absolutely void and cannot be ratified.
  • 7. Contracts with Parda-Nishin Women
    • Such women, who by custom of the country or by usage of the particular community to which she belongs is obliged to observe complete ‘seclusion’.
    • In order to make a valid contract with such a woman, it should be established that the deed was not only executed by her but was explained to and understood by her.
  • 8. Contracts by Married or Single Women
    • Can enter into contract if she is a major and does not suffer from any disability.
    • A married woman can enter into a valid contract w/o her husband’s consent.
    • A married woman can even bind her husband’s property and pledge his credit for pressing necessities.
  • 9. Other Contracts
    • By Corporations
    • It is competent to contract.
    • It cannot enter into contracts of a strictly personal nature.
    • By Insolvents
    • Such persons cannot enter into contracts as his property vests in the hands of the Official Assignee, who can enter into contract on behalf of the insolvent.
    • Sec. 13: “Two or more are said to consent when they agree upon the same thing in the same sense.”
    • Agreeing upon the same thing in the same sense means ad-idem .
    • Sec. 14: “Consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation, or mistake.”
  • 11. Coercion
    • It is committing, or threatening to commit, any act forbidden by the IPC,
    • or the unlawful detaining, or threatening to detain any property,
    • to the prejudice of any person whatever,
    • with the intention of causing any person to enter into an agreement.
  • 12.
    • Ashok threatens to shoot Brijesh if he does not let out the house to him. Brijesh agrees to do so. This agreement has been brought about by coercion.
    • Ajay and Bittu are negotiating on a Contract, but Ajay are unwilling. A third party threatens to assault Ajay if he does not enter into contract with Bittu, who is unaware of these threatening. Ajay, thereupon out of fear, enters into a contract with Bittu. Does the contract become binding on Ajay?
  • 13.
    • It is observed here that the consent of Ajay has not been freely obtained as he was threatened with assault.
    • Coercion may proceed from anybody, even a person who is not a party to the contract.
    • Ajay’s consent as such is caused by coercion and therefore, the consent is not binding on Ajay.
  • 14. Undue Influence
    • Sec.16(1): “A contract is said to be induced by ‘undue influence’ where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.”
  • 15. When is a person deemed to be in a position to dominate will of another?
    • Real or apparent authority, or
    • In a fiduciary relation, or
    • Mental capacity temporarily or permanently affected by reason of age, illness, or mental/bodily distress.
    • Relationships of father & son, guardian & ward, husband & wife, doctor & patient, trustee & beneficiary, solicitor & client, pardanishin women, etc would fall within the ambit of undue influence.
  • 16. Fraud
    • Sec.17: Fraud means and includes any of the following acts committed by a party to a contract; or with his connivance; or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract –
    • (1) the suggestion, as to a fact, of that which is not true by one who does not believe it to be true;
  • 17.
    • (2) the active concealment of a fact by one having knowledge or belief of the fact;
    • (3) a promise made w/o any intention of performing it;
    • (4) any other act fitted to deceive;
    • (5) any such act or omission as the law specially declares to be fraudulent.
  • 18. Essentials of Fraud
    • There must be an intention to deceive.
    • Act done by a party to a contract, or with his connivance or by his agent.
    • There must be false representation of facts, eg, suggestio falsi .
    • There must be an active concealment of a fact of which he has the knowledge and duty to disclose, eg, suppressio veri .
  • 19.
    • There must be a false promise.
    • Any other act or omission which the law considers it to be fraudulent.
    • Or fitted to deceive which is done with the obvious intention to commit fraud.
    • The party so induced must have acted upon it and suffered loss.
  • 20. When is a contract not voidable? (Exceptions)
    • Deceit which does not deceive is no fraud.
    • Negligence is no fraud.
    • Ignorance is not fraud.
    • If there is a Waiver (pardon) of the fraud.
    • Silence w/o any duty to speak does not amount to fraud.
    • Silence likely to affect willingness of contracting by a person is not fraud.
  • 21. When is silence fraudulent?
    • Where the circumstances of the case are such that it is the duty of the person keeping silence to speak; or
    • Where silence is in itself equivalent to speech.
    • X says to Y: “If you do not deny it, I shall assume that the horse is sound.” Y says nothing. Here Y’s silence is equivalent to speech.
  • 22. Misrepresentation
    • Consent given under misrepresentation of facts is no consent at all.
    • A statement made which in fact is not true, under the belief that it is true, is misrepresentation.
    • X says to Y that Z’s horse is of a very good breed & can run 40kms at a stretch. X believes it to be true and Y buys the horse from Z. It turns out that the horse can run only 4kms. This is misrepresentation.
  • 23. Mistake
    • An erroneous belief about something is called “mistake”.
    • When an agreement is entered into under a mistake, consent is not free.
    • Mistake is of two kinds – (i) mistake of fact; and (ii) mistake of law.
  • 24. Mistake of Fact
    • Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void (Sec.20).
    • X agrees to buy from Y a certain breed of dog. It turns out that the dog was dead at the time of the bargain though neither party was aware of the fact. The agreement is void.
  • 25. Mistake of Law
    • Sec.21 provides that a contract is not voidable because it was caused by a mistake as to any law in force in India;
    • but a mistake as to a law not in force in India has the same effect as a mistake of fact.